The Confederation of British Industry and the Engineering Employers Federation claim the climate change levy has left some companies with huge tax bills while others are better off, regardless of whether they have taken steps to improve energy efficiency.

The levy is intended to encourage firms to use energy more efficiently, with revenues mainly returned to businesses through reduced national insurance contributions.

But the CBI report showed the manufacturing sector had paid out an extra £143m in the first year of the tax, with 57% of manufacturers saying they were less competitive as a result.

Jones said: ‘This survey shows the climate change levy is damaging key sectors of the UK economy and driving jobs abroad – it’s crazy to pile on extra costs when manufacturers are struggling to remain competitive, and all employers are bracing themselves for next April’s increase in national insurance contributions.’

His criticisms were supported by the Liberal Democrats – Vincent Cable, the party’s trade and industry spokesman said: ‘The climate change levy must be replaced by a proper carbon tax which would apply across the board on energy raw materials and be related to the amount of carbon dioxide they create. Businesses would choose a carbon tax over the flawed climate change levy.’